Wells Fargo Survey: Construction Industry Reports Strong Optimism for Eighth Straight Year

96 percent expect to buy new, used equipment; 92 percent give nod to
rentals


SAN FRANCISCO–(BUSINESS WIRE)–For the eighth consecutive year, construction industry executives say
they feel optimistic about the year ahead for their business sector,
according to the 43rd Wells Fargo (NYSE:WFC) Construction
Industry Forecast released today
. The 2019 forecast reveals
sustained confidence for the industry and expectations that expansion is
more likely than contraction. The results are a tempered decrease from
2018 record-high optimism.

Conducted by Wells
Fargo Equipment Finance
in late 2018, the survey tallied opinions of
industry contractors, manufacturers, and equipment distributors to
determine the National Optimism Quotient (OQ) — a key indicator of
whether or not local, nonresidential construction is likely to increase
or decrease in the coming year. The 2019 OQ remains in strongly
optimistic territory at 122. Although optimism declined slightly from
133 in 2018, most executives maintain an encouraging outlook on industry
expansion and 2019 net profits.

OQ scores above 100 represent strong optimism for increased local
construction activity relative to the perceived level of activity the
prior year. Scores between 75 and 99 denote more cautious or measured
optimism. A score below 75 signals a more pessimistic point of view,
where fewer executives say local construction activity will increase
than say it will decrease.

“Even if this year’s activity remains the same as last year, many see it
as a positive for the industry due to significant growth over many
years,” said John Crum, Construction Group national sales manager for
Wells Fargo Equipment Finance. “If 2019 turns out the way survey
respondents indicate, we could be in for another good year.”

To weigh future business decisions, Crum urges business owners to
consider the full-report details and also read respondents’ verbatim
comments about the industry printed throughout the report.

In addition to determining the OQ, the 2019 survey posed questions about
equipment sales and purchase expectations, rental market trends, and
major concerns and challenges that industry participants identified as
relevant to their businesses.

Top learnings for 2019 from the Construction Industry Forecast include:

  • New equipment levels expected to be maintained or increased

    Ninety-six
    percent of contractor respondents plan to purchase new or used
    equipment in the coming year. Of those, 76 percent intend to maintain
    or increase their purchases of new equipment compared to 2018.
    Three-fourths of contractors say they will increase or maintain their
    level of purchasing used equipment, and nearly 13 percent don’t plan
    to purchase used equipment at all.

  • Contractors intend to maintain or increase rental equipment levels

    Ninety-two
    percent of contractor respondents intend to maintain or increase their
    level of rental activity. Forty-six percent of equipment renters
    identify flexibility as the primary reason — far above other reasons
    for renting identified in the results, including renting costs.

  • Finding qualified workers remains a concern

    Ability
    to hire qualified workers is the No. 1 concern among survey
    respondents in two categories: Forty-seven percent of contractor
    respondents cited hiring qualified workers as their top cost concern;
    36 percent of all respondents pegged it as the leading risk to the
    industry. Executives ranked qualified workers above the impact of
    healthcare costs, employee wages and benefits, tariffs, interest
    rates, and equipment.

How does Optimism Quotient compare to other key economic indices?

Although there are outlier years, data over time shows that the OQ
tracks closely with four economic indices that are significant to the
construction industry outlook:

  • Architectural Billings Index
  • Private Construction Index
  • Industrial Production Index
  • Public Nonresidential Construction Index.

More about the Construction Industry Forecast

The 2019 Construction Industry Forecast results represent the 43rd
year in which Wells Fargo Equipment Finance has surveyed construction
industry executives to gather insight into current business conditions
and trends and to measure sentiment about activity in the year ahead.
Responses came from 441 construction industry executives in 48 U.S.
states. Nearly all of the respondents reported that they have been in
the industry five years or more. To learn more, download the complete report.

About Wells Fargo Equipment Finance

Wells Fargo Equipment Finance provides competitive fixed- and
floating-rate loans and leases covering a full range of commercial
equipment for businesses nationwide as well as floor planning and
inventory financing and vendor programs in selected industries in the
United States and Canada. Wells Fargo Equipment Finance is a leading
bank-affiliated equipment leasing and finance business in the United
States by asset portfolio and annual originations, with more than
335,000 customers and 2,500 team members. Wells Fargo Equipment Finance
is the trade name for certain equipment leasing and finance businesses
of Wells Fargo Bank, N.A. and its subsidiaries. Equipment financing
transactions are provided in Canada by Wells Fargo Equipment Finance
Company.

About Wells Fargo

Wells Fargo & Company (NYSE: WFC) is a diversified, community-based
financial services company with $1.9 trillion in assets. Wells Fargo’s
vision is to satisfy our customers’ financial needs and help them
succeed financially. Founded in 1852 and headquartered in San Francisco,
Wells Fargo provides banking, investment and mortgage products and
services, as well as consumer and commercial finance, through 7,800
locations, more than 13,000 ATMs, the internet (wellsfargo.com) and
mobile banking, and has offices in 37 countries and territories to
support customers who conduct business in the global economy. With
approximately 259,000 team members, Wells Fargo serves one in three
households in the United States. Wells Fargo & Company was ranked No. 26
on Fortune’s 2018 rankings of America’s largest corporations. News,
insights and perspectives from Wells Fargo are also available at Wells
Fargo Stories
.

Cautionary Statement about Forward-Looking Statements

This news release contains forward-looking statements about our future
financial performance and business. Because forward-looking statements
are based on our current expectations and assumptions regarding the
future, they are subject to inherent risks and uncertainties. Do not
unduly rely on forward-looking statements as actual results could differ
materially from expectations. Forward-looking statements speak only as
of the date made, and we do not undertake to update them to reflect
changes or events that occur after that date. For information about
factors that could cause actual results to differ materially from our
expectations, refer to our reports filed with the Securities and
Exchange Commission, including the “Forward-Looking Statements”
discussion in Wells Fargo’s most recent Quarterly Report on Form 10-Q as
well as to Wells Fargo’s other reports filed with the Securities and
Exchange Commission, including the discussion under “Risk Factors” in
our Annual Report on Form 10-K for the year ended December 31, 2017,
available on its website at www.sec.gov.

Contacts

Trina Shepherd, 312-339-0012
[email protected]
@TrinaShepherdWF

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